How SMEs can strengthen their innovative capacity

Dhe economic press likes to celebrate the genius of individuals who, out of outstanding intuition, strong will and shrewd action, found businesses and then persistently lead them to success. Even if certain exaggerations have more to do with the creation of identification figures than with reality, we do not want to deny here the driving role of entrepreneurs in the market economy. Rather, we would like to point out a central condition for innovations to be realized. By this we mean the cooperation of experts from different fields. There is a long way to go between the intuition for a new product or a new service and its implementation, which still has to be explored. Such a task could not be accomplished without the contributions of many experts working together, as numerous studies have shown. There are indeed cases in which this participation of individuals must be understood as the execution of specifications. More numerous, however, seem to be the cases in which it is an active process of co-design by many. After all, many innovations - especially of an incremental nature - come from the contributions of employees, and by no means only those from research and development.

When business knowledge is lacking

In view of the technical complexity and the ever more demanding market conditions, innovations require very different knowledge and competencies. As a rule, these cannot be mastered by one person and often not even by a few. Thus, the need arises to assemble groups of experts so that they can each contribute to the different aspects concerning the realization and successful marketing of an innovation. In the case of large companies, it happens that certain profiles are present in the organization but are either already involved in other projects or belong to other organizational units, which means that they cannot easily be called upon for new initiatives. In the case of SMEs, on the other hand, it is on the one hand due to insufficient workload that certain profiles are not even present and are not hired. On the other hand, some managers are not even aware that certain skills and knowledge are needed in the context of an innovation project! A common case in this respect concerns business knowledge, as many SMEs are founded or managed by technicians. Perhaps this is the reason why some innovations do not succeed in the market. As the saying goes, it may have been developed "past the market".

Disruptive factors in cooperation

But if the skills and knowledge are there, it is only "half the battle": Anyone who has been involved in such projects can probably attest to the fact that cooperation with the "others" is by no means an undemanding endeavor. Collaboration in itself can be challenging, even more so when the people involved differ from each other in terms of their training and professional experience. The reason for this is the different ways of thinking - mental models, as they are called in technical jargon - that specialists acquire as a result of their training and then consolidate over the years of their work. Distinguishing elements of a personal nature - gender, age, origin, etc. - further increase diversity and - unfortunately often - make cooperation even more difficult. However, neither overemphasizing nor ignoring the distinguishing characteristics offers any help. To downplay differences is to suppress them. Thus they are off the agenda, but very much present in the background as a disturbing "background noise". An overemphasis - as sometimes demanded by so-called political correctness - can in turn ascribe to them a significance that makes them all the more an artificially created disruptive factor.

What team members (don't) know

So how can the existing competencies be brought to bear, i.e. how can they be mobilized so that the end result in innovation projects benefits from their contribution, which can give the company a competitive advantage and the employees a boost in motivation? As expected, there are no patent remedies. Nevertheless, many studies have identified tools that can serve as support or levers. Some of them are suitable for all projects. For others, their suitability varies depending on the characteristics of the product or service to be developed in the innovation project. If we focus on the basic tools, we can point out that one often overlooked hurdle in innovation projects with a multidisciplinary background is the lack of mutual awareness.

Some studies show that team members are often unaware or have misconceptions about what the specific contribution of their colleagues can be in the project. The misconceptions therefore mostly stem from professional and organisational prejudices, which alternatively place a special or hardly any value on the professional opinion of colleagues who work in a certain department, who have or have not enjoyed a certain education at a certain university, etc. Further prejudices concerning gender, age, origin, etc., may have an aggravating effect. As a result, the contributions of colleagues who enjoy prestige among a larger number of the other project members are overvalued, even if they do not lead on in the specific project context, while those of colleagues who occupy a marginal position are ignored. Perhaps it is easier to attribute such judgments to differences in hierarchical position: who hasn't noticed that senior positions make themselves heard more? But hierarchical position alone does not explain the problem, because the phenomenon has an impact due to quite a few other social characteristics such as gender, age, origin, type and degree of education, etc.

Hierarchy as a stumbling block

One might think that SMEs are immune to the above problems because, due to the small number of employees, they know each other. The fact is that precisely because of this, a misguided certainty can set in. After all, innovation projects should bring to bear knowledge and skills for which there is often no need at all in everyday business. Irrespective of the peculiarities of individual cases, the undesirable result always remains: potentially important contributions do not enjoy respect because they come from the supposedly "wrong" person. The phenomenon

Innovations require different knowledge and competences.

also has a flip side, which leads to the same consequences. A pronounced risk aversion can, for example, inhibit project members from lower hierarchical levels, with the "wrong" gender or without special training, etc. They therefore do not trust themselves to contribute their knowledge and experience to the project. As a result, they do not trust themselves to contribute their knowledge and experience to the project. As a result, the group misses out on important clues that could lead to valuable insights, and sometimes even to a breakthrough. If there are particularly charismatic, communicative or respected colleagues in the group, the effect is intensified: some appear more dominant, while others are pushed into the insignificant background.

increase awareness

Is there a kind of "antidote" to this? Most authors agree that the first step to avoid them is to become aware of the dangers and mechanisms described. In the case of SMEs, it is then of the utmost importance that the management takes the lead in this, all the more so if they themselves founded the organization. In such cases, the insistence on one's own opinion or the tendency to neglect other opinions is often a reason for success (and equally for failure) and can - especially after success has set in - lead to stubbornness. If circumstances change, the otherwise proven course of the company can lead to a dead end. If the management has then taken the first step - either alone, together with a coach or as a result of a collective discussion of the topic - it is advisable to also raise the awareness of the employees for equal participation in group work, especially those who are involved in innovation-oriented initiatives. Linked to this process of disseminating these insights, the supporting step of defining norms can also be initiated. This is not a matter of writing down guiding values that can be published on the company's website and otherwise have little effect on what happens in the company, but rather of drawing up a concise code of conduct for a specific innovation project. Of course, the code may be adopted in other similar projects, but not without reflection! Since the agreed standards have a limited scope, they may deviate from the guidelines that otherwise apply in the company for everyday business. Some examples of such rules are: Opinions that differ from those of the majority are welcome and must not be rejected without discussion; asking questions is a virtue that must be actively cultivated by all; before an idea is rejected, it should be developed as far as possible.

Rule dictate or say?

Who should formulate the rules? Opinions differ on this. Some adhere to the time-tested notion that the more efficient way is that of the "benevolent dictator": the one who can make decisions should make the rules. Others point out that the participation of group members in the formulation of the norms increases the chances of their observance. In any case, it is important that all project participants are asked what they think of the norms or can freely express their concerns about the principles

There are, of course, other tools that apply to projects in general. We would like to make a brief reference here to a tool that only comes into play under certain circumstances. In this regard, we refer to modular products. These allow different specialists to focus only on certain components, while other parts are the responsibility of colleagues or external partners. This could give the impression that cooperation between groups can be bypassed. This is even true to a certain extent, but it becomes necessary to jointly define the framework conditions that apply to all parts on the one hand and the interfaces among the components on the other hand. This task can advantageously be left to a representative of the respective groups, who acts as a "gatekeeper" and ensures that information, instructions and requirements are channelled and filtered. The choice of this key person should not be made solely on the basis of excellent professional competence, but should also - perhaps even predominantly - take other competences into account. Two particularly important ones in this respect are negotiating skills and a good understanding of interrelationships of both a technical and an economic nature, beyond the scope of the respective field of activity. On the other hand, such a function is not required if the product or service is integrated, i.e. does not allow for separate development of the components. This also includes the development of a component of a more complex product, if the component has to be driven forward by a team of specialists with different technical backgrounds.

If you start with such "simple" means, the chances of success in innovation projects increase - and last but not least, the working atmosphere in and outside the project is improved as a result.